TSAG Market Analysis: Portland, Oregon

By: The Storage Acquisition Group

Reports of past overbuilding of storage facilities in Portland appear to have been greatly exaggerated.

In the years leading up to the start of the coronavirus pandemic in 2020, Portland, Oregon was generally thought to be one of the most oversaturated storage markets in the U.S., after years of new developments by real estate investment trusts (REITs) and other large industry players.

Indeed, occupancy rates and rental prices took a hit in Portland late last decade amid the flood of new supply in the region, according to industry experts.

Then the pandemic hit, the economy tumbled and demand for storage space, as is usual during recessions, spiked across the country, leading to the sudden filling up of Portland’s new storage facilities that many thought would remain vacant for years to come.

“I was one of those who felt like we were overbuilt, but I was proven wrong,” says Edwin Kawasaki, a principal at Additional Self Storage LLC and former CFO of Northwest Self Storage in Portland. “The market absorbed all the extra supply. All the new units are now full.”

Granted, the economy could still dramatically recover, reducing demand for storage space and exposing the true non-pandemic state of the Portland storage market. But most industry officials seem to agree that the region’s population has continued to steadily increase in recent years – and thus demand should remain high enough to keep Portland’s occupancy rate in the 90-plus percentage range.

To be clear: The Portland region, with a population of 2.4 million, has seen negative effects from last decade’s building boom, with the rate of rental price increases among the lowest in the nation, due to the hefty amount of supply in the area, according Yardi Matrix data.

Yet prices are hovering in the respectable $145 range and up for a 10-by-10 non-climate-controlled unit in the Portland area – and most anticipate rental prices to continue to increase in coming years.

Overall, the amount of square feet of storage space per capita in the tri-county Portland area is about 7.3, not that much higher than the national penetration rate of 7, says Paul Fiorilla, director of research at Yardi Matrix.

The metro Portland market will be tested again in the coming year or two, with more than 800,000 square feet of new storage space currently under construction set to be delivered in 2022, Fiorilla said. An additional 1 million square feet of new space is in the planning stages.

But Fiorilla says he is cautiously optimistic the region can absorb the extra supply precisely because the Portland area’s population continues to grow, as it has in the past. From 2000 to 2020, the region’s population soared by 500,000, according to U.S. Census data.

Melissa Shandor, Chief Strategy Officer at The Storage Acquisition Group, feels the region can absorb some new supply. The reason: with hundreds of new housing starts planned for the Portland area new residents are moving in.

“As they say, where housing goes, storage will follow,” she says. “The housing starts indicate continued population growth that’s going to help fill up the square footage in the supply pipeline.”

But Shandor warns that there’s actually two sub-markets within the Portland area – the core downtown market and the outer ring market.

The core market has more storage space per capita than outlying areas.  “For those who plan to develop storage, consideration of the outer ring would be wise,” says Shandor.

“There’s more potential and opportunities in the outer ring,” says Shandor. “It’s an attractive place for development and it appears the city agrees based on the projected housing starts”

John Bull, owner of John Bull Builders LLC in Portland, said he’s definitely seen a slowdown in storage construction in the city of Portland. “There was a huge push there two years ago, but you don’t see as much building activity today,” he says. “Some projects are going up, but not as many as before.”

Besides last decade’s overbuilding in the city proper, Bull said the high cost of construction — including the cost of materials, labor and land – is discouraging many would-be developers from starting new storage projects in Portland.

Kevin Howard, a long-time veteran of the storage industry and one of the founders of National Storage Affiliates, said the Portland-area market has a history of running hot and cold.

A storage construction boom during the early 2000s came to an abrupt halt in 2008, when the subprime mortgage crisis hit and brought the nation’s financial system to its knees. It took until about 2014 for the storage industry to recover in Portland, with demand finally catching up to supply and prompting new construction again, Howard said.

Now, roughly the same pattern is repeating itself in Portland: overbuilding led to a softening of occupancy and rental rates. But this time around, the industry didn’t have to wait as long to recover, Howard said.

“The COVID crisis has actually helped the industry,” Howard, the former head of Northwest Self Storage, said of increased demand for storage during the recent economic downturn.

Despite the historic “ups and downs” of the Portland market, Howard said he remains bullish on Portland, primarily due to its continued economic and population growth.

“It’s a very strong market,” he said. “People want to be here.”

The Storage Acquisition Group’s Shandor agrees. “Portland is one of the fastest growing self-storage markets in the country,” she said. “I’m very optimistic about Portland.”

Greater Portland at a Glance

Population	2.4M
Number of storage facilities	275
Square footage	18.1M
Under construction	800,000 SF
Planning stages	1M SF

  Note: Data from Yardi Matrix

The Storage Acquisition Group specializes in purchasing storage facilities and portfolios nationwide. Uniquely, we allow owners to sell direct without having to list their facility. With our 4-tiered approach, Market Analysis, Acquisitions, Underwriting, & Closing Support, The Storage Acquisition Group is able to help owners navigate a simple sales process while netting the highest possible profit.

TSAG Market Analysis: Salt Lake City

By: The Storage Acquisition Group

Salt Lake City hits a self-storage sweet spot.

If there’s such a thing as a self-storage sweet spot for investors, it may well be Salt Lake City.

The Salt Lake City region may not have the most impressive industry statistics when it comes to self-storage rental prices, occupancy rates and other measurements of how hot (or not hot) a market may be compared to other areas of the country.

But Salt Lake City and its surrounding suburbs still score high in just about every category of importance to self-storage players, such as in population growth, new housing construction and economic expansion, in addition to strong rental prices and occupancy rates.

As a result, the Salt Lake City area of Utah has become one of the most desirable self-storage markets to be in for owners and investors alike, industry officials agree.

“It’s a very strong market,” says Michael Wolfe, owner of Downtown Storage and an investor in other self-storage enterprises in the Salt Lake City area. “All of our facilities are doing well.”

“The Salt Lake City area has all the right check marks in its favor,” says Cory Sylvester, a partner at Radius +, the industry research and analytics arm of Union Realtime. “Where’s there’s growth in population and new jobs, self-storage will follow. And Salt Lake City has both.”

In recent decades, the Salt Lake City area has most definitely grown, from 792,000 people in 1990 to about 1.18 million people today, according to U.S. Census data. Over the years, people have flocked to the region for a number of reasons, including its natural beauty, its growing tech industry and its status as the state capital and home to the Church of Jesus Christ of Latter-day Saints (LDS Church).

Recently, the region and other parts of Utah have also seen an influx of new residents arriving from high-cost states such as California, industry officials say.

No matter what the reasons, Salt Lake City’s recent growth in population is driving a regional housing-construction boom and increasing demand for storage, says Dan Nixon, owner of Paragon Group Inc., a property management and development company that owns and operates a number of self-storage facilities in Utah. Its brands include Lock it Up Self Storage and Cubes Self Storage.

“The area’s economy and housing market are among the strongest in the nation,” Nixon says. “In-migration has been huge.”

Yet as storage demand has increased, the region has only seen relatively modest increases in new construction, data indicates.

With about 194 storage facilities, the region has 9.8 million square feet of storage space, or about 8.3 square feet per capita, which is higher than the national penetration rate of about 6, according to Radius + data.

But the region’s penetration rate is far below those seen in other red-hot storage markets, indicating Salt Lake City is far from being oversaturated with new facilities. Indeed, only nine new facilities are currently in the planning pipeline, according to Radius +.

The general lack of overbuilding is one of the reasons why rental prices have remained relatively stable, excluding recent price spikes associated with the COVID-19 pandemic and economic downturn. In December, rents for 10-by-10-foot, climate-controlled units in the area were going for about $150, according to data.

Occupancy rates, meanwhile, have remained steady, in the 93 percent range, at facilities tracked by Radius +.

Jordan Cherrington, a manager at Draper Self-Storage and a member of the board of directors at the Utah Self Storage Association, says many developers are balking at new projects due to the high cost of construction.

Rent prices may have risen 10 percent to 20 percent due to the pandemic-era increase in demand for storage, he noted. But construction costs for some items have increased by 100 percent or more, he says.

“Construction prices are through the roof,” Cherrington notes. “A lot of builders are very hesitant to proceed with projects.”

Nixon adds that the cost of land has also skyrocketed in recent years, further discouraging new developments. “I’m not buying any new land for self-storage (development) because none of the numbers pencil out,” he says.

Jonathan Cutler, chief operating officer at The Storage Acquisition Group, says there’s another reason why there isn’t much construction going on in the Salt Lake City area: zoning and permitting restrictions. “A lot of municipalities are stopping self-storage from coming in,” says Cutler.

The combination of scarce land and government building restrictions has contributed to the Salt Lake City region becoming a “high barrier area” for those trying to expand or crack into the market, says Cutler.

But that’s good news for existing facility owners, who benefit from limited supply amid increasing demand for storage.

Cherrington notes that many large investors, attracted to the Salt Lake City market, have recently been offering huge sums to buy properties, driving down cap rates from about 6.5 two years ago to below 4 today.

“It’s a great time if you’re an owner,” he says.

The Storage Acquisition Group’s Cutler said he’s not surprised that so many industry players want a piece of the Salt Lake City action. He rattled off all the pluses of the area – its growing tech industry (with some calling the region a “mini-Silicon Valley”), skilled work force and strong tourism sector, among other strengths.

“Salt Lake City is a great opportunity for anyone looking to do business in a high-growth area,” Cutler says. “We’re very high on Salt Lake City.”

Salt Lake City at a Glance

Metro Area Population	1.8M
Penetration Rate	8.3
Total Storage Space	9.86M SF
Occupancy Rate	93%
Median Household Income	$75,878

  Note: Data from Radius+, U.S. Census

The Storage Acquisition Group specializes in purchasing storage facilities and portfolios nationwide. Uniquely, we allow owners to sell direct without having to list their facility. With our 4-tiered approach, Market Analysis, Acquisitions, Underwriting, & Closing Support, The Storage Acquisition Group is able to help owners navigate a simple sales process while netting the highest possible profit.

TSAG Market Analysis: Seattle and Tacoma

By: The Storage Acquisition Group

The Seattle-Tacoma self-storage market: Steady as she goes

Looking for a self-storage market that’s traditionally been strong, stable and steady over the years? Those interested in self-storage need look no further than the Seattle metropolitan area.

The Seattle-Tacoma self-storage market definitely has had its share of challenges and opportunities in recent years, from high land prices and tough zoning laws to a growing population and vibrant tech-driven economy.

Through it all, the Seattle-Tacoma area has managed to achieve a sort of Goldilocks balance – not too hot, not too cold – that’s led to a combination of strong, though not too strong, self-storage occupancy and rental rates, new construction and heightened competition.

It is anyone’s guess how long the relatively stable and steady market can last – and there are those who believe the Seattle-Tacoma market may soon experience major turbulence due to what they see as recent overbuilding.

For now, though, most industry players say the overall Seattle-Tacoma market is humming along quite nicely.

“The whole industry is doing well here,” says John Eisenbarth, vice president of operations at West Coast Self Storage, which manages 94 facilities in Washington, Oregon, California and Nevada. “Demand is high and there’s a lot of money flowing into the industry.”

“The Seattle metro area is such a strong market,” says Cory Sylvester, a principal at Radius Plus. “It has a lot of jobs, and it’s a scenic area where people want to live and work.”

All of which translates into an attractive self-storage market, where the occupancy rate is just under 93% for the 454 facilities tracked in the Seattle-Tacoma region. Prices are currently hovering around $200 per month for a 10-foot-by-10-foot climate-controlled unit.

The solid numbers are ultimately driven by the region’s population growth over the decades, rising from 1.7 million in 1980 to 2.7 million in 2000 and then to 3.8 million today, according to data.  Driving those numbers has been the Seattle-Tacoma area’s emergence as a major tech hub, with both Microsoft and Amazon calling the region their home.

The net result: A healthy self-storage market stretching back more than a generation.

“Across the board, it is a strong market,” says Melissa Shandor, chief strategy officer at The Storage Acquisition Group. “The market is consistent, with tracked, gradual growth.”

One industry number that jumps out is the area’s overall penetration rate of 6.8, or the number of square feet of self-storage space per capita.  That’s higher than the national penetration rate of about 6, but it’s far from being considered oversaturated.

There is one major cause for concern: Approximately 1.9 million square feet of new self-storage space in the planning and construction stages in the Seattle-Tacoma area.

With the potential of adding more than 7 percent to the region’s current 25.4 million square feet of storage space, the possibility of oversaturation looms in the future.

Patrick Gilroy, co-owner of Stor-House Self Storage, is seeing the burst of new construction first hand.  Across the street from his 730-unit facility in Bellevue, a city of 144,000 located across Lake Washington from Seattle, Public Storage is tearing down an old facility and planning to build a new 1,000-unit storage facility, he says.

Once the Public Storage project is finished, Gilroy says he’s expecting “downward pressure on rental rates” in the area.

In general, Bellevue and other growing communities surrounding Seattle and Tacoma are seeing the highest number of new construction projects, Gilroy and other industry experts agree.

“Bellevue and other places are getting spillover from Seattle,” says Gilroy. “People are moving further out, especially since COVID-19. Remote work has helped the suburbs.”

“Investors should pay attention to the activity and data surrounding Seattle and Tacoma,” agrees TSAG’s Shandor. “The story is being told in the tertiary markets.”

Not that it’s easy to build or do business in those surrounding communities, the entire Puget Sound area is surrounded by water, mountains and evergreen forests, thus limiting where developers can build and driving up land prices in the process. Then there’s tough zoning laws that contribute to the area’s image as a “high barrier” storage market.

Andrew Burachinsky, an advisor at The Storage Acquisition Group, says the Seattle-Tacoma market clearly has more pluses than minuses. “It’s been experiencing an influx of young professionals moving there, helping the housing market, and that’s keeping the self-storage rental rates high,” he says.

But he warned recent new construction is threatening to disrupt the usually stable Seattle-Tacoma market. “Unfortunately, it could be over-supplied soon,” he says. “There could be some major adjustments in prices.”

West Coast Self Storage’s Eisenbarth agrees the potential is there for market turbulence ahead. “I don’t have a crystal ball, but over the next three or four years new supply could cause some price pressures,” he said.

Still, Eisenbarth, a member of the Washington (State) Self Storage Association’s board of directors, says he’s bullish on the Seattle-Tacoma self-storage market in general.

“Acquisitions have become more of a scene this year, compared to past years,” he says, noting the increasing flow of investment dollars into the popular Seattle-Tacoma region.

Seattle-Tacoma at a Glance

Population	3.8M
Number of storage facilities	454
Square feet of storage	25.4M
Penetration Rate	6.7
Occupancy Rate	92.94%
Median Household Income	$91,068

  Note: Data from Radius+, U.S. Census

The Storage Acquisition Group specializes in purchasing storage facilities and portfolios nationwide. Uniquely, we allow owners to sell direct without having to list their facility. With our 4-tiered approach, Market Analysis, Acquisitions, Underwriting, & Closing Support, The Storage Acquisition Group is able to help owners navigate a simple sales process while netting the highest possible profit.

TSAG Market Analysis: Calgary

By: The Storage Acquisition Group

Calgary is a seemingly boom-or-bust town in more ways than one.

Canada’s third-largest city and fourth-largest metropolitan center, Calgary is well known for its vibrant, though volatile, oil-and-gas industry that has economically dominated large portions of Alberta Province for decades now.  This has spurred fast growth when times are good for the oil and gas markets and slow growth when times are not so good.

In a way, Calgary’s self-storage market reflects that boom-or-bust trend.  Some areas of metropolitan Calgary are experiencing an oversaturation of self-storage facilities while other areas have little or no facilities. Other areas have seen construction of new self-storage facilities, while many areas still rely on old (and full) drive-up facilities.

“It doesn’t make sense sometimes,” says Louis Libin of Calgary-based Trilogy Self Storage, referring to the juxtaposition of old and new storage facilities spread inconsistently around the Calgary region. “Calgary is an anomaly. You’ll have an old and unheated drive-up facility doing well and nearby a new facility that’s struggling.”

To be clear, Libin and other self-storage players are big fans of the Calgary market, noting that the metropolitan area continues to grow in population, though in fits and starts, and that the economy has been diversifying in recent years. The Calgary region’s population now stands at about 1.4 million people.

As for the region’s self-storage market, Radius Plus currently tracks 64 storage facilities, or 3.17 million square feet of space, in the Calgary metropolitan area.

As is the case in other Canadian cities, Calgary has fewer square feet of storage space per capita compared to metro areas in the U.S. The self-storage penetration rate for metropolitan Calgary is about 2.25, roughly equal to other major Canadian cities but only about one-third the rate as seen in U.S. cities.

The reason cited for the relatively low storage supply in Calgary and other Canadian cities: higher taxes and construction prices and tougher zoning and building codes.

Industry experts also note that self-storage is still a relatively new concept for many Canadians, though its popularity and the demand for space are steadily rising.

The result of the limited supply and slowly growing demand: solid rental prices in Calgary.

Prices for 10-foot-by-10-foot storage units can range anywhere from $180 to $200 and up (Canadian dollars) per month, or $145 to $161 in U.S. dollars, according to Radius Plus data. Those are strong numbers, no matter what the international currency.

The favorable rental numbers and other positive factors are attracting more self-storage investment players to Calgary, says Matt Verity, vice president of storage operations and marketing at StoreWest, which owns two self-storage facilities in Calgary, one in Montreal and two in Nova Scotia.

“It’s getting more competitive,” says Verity. “More companies are looking at Calgary.” They include both Canadian and U.S. self-storage players, he notes.  New construction is occurring in some parts of the city – while existing facilities are being snapped up. “Consolidation is occurring,” says Verity.

It helps that the oil-and-gas industry has been on the upswing of late, as commodity prices soar amid supply-chain problems across the world, caused mostly by pandemic-related disruptions at international ports. Calgary is benefiting from that recent surge in oil and gas prices.

“It’s getting more robust,” Verity says. “We’re feeling more bullish these days.”

The city needed the economic shot in the arm, considering the global oil-and-gas industry had been struggling until recently and harming Calgary’s economy in the process. Indeed, the office vacancy rate in downtown Calgary remains high and the region’s unemployment rate hovers at about 9 percent, according to data.

The economic ups and downs have made Calgary a tricky place for self-storage, Calgary is a good market, but it’s volatile.  The pluses are definitely there, noting the region’s growing population and strong housing market. Calgary’s median household income is also strong at $107,479 (Canadian), higher than other major Canadian cities, such as Montreal, where the median household income is about $85,000 (Canadian), according to Radius Plus data.

In addition, Calgary may be known as an oil-and-gas town, but it’s located in a scenically beautiful area of Alberta, at the foothills of Canada’s Rocky Mountains, and its tourism and recreational sectors are considered strong — and getting stronger by the year.  That has led to a boost in storage of boats, RVs, and other recreational-related items.

“I’m very, very bullish on Calgary,” says Lloyd McDonald, director of acquisitions in Canada for The Storage Acquisition Group. “It’s a very beautiful and livable area. There’s more to Calgary than oil and gas.”

McDonald notes that storage occupancy levels in Calgary have remained strong over the years despite economic ups and downs. Indeed, some of the best-performing facilities are non-climate-control, drive-up storage structures built in the 1970s and 1980s.

Meanwhile, new facilities are mostly going up in the outer northern, western, and southern areas of metro Calgary. McDonald said there are “great opportunities” for development in underserved areas of Calgary.

Libin of Trilogy Self Storage said his firm is eyeing possible new self-storage developments “within a five- to ten-year window,” possibly marrying them up with car-wash services at sites. “I’m not too worried about raising capital (for new projects),” says Libin.  Still, zoning restrictions are among the biggest challenges facing any new developments, Libin says.

Verity at StoreWest said it’s critical to carefully research an area before embarking on new storage projects in the Calgary area. After securing a site, developers then need to closely work with community groups and boards to make sure their concerns are addressed.

Among the things communities want are well-landscaped sites and ground-floor amenities of some sort, such as retail or some other non-storage services, Verity says.

Greater Calgary at a Glance

Population	1.4M
Penetration Rate	2.25
Development Pipeline	2.25%
Median Household Income	$107,479 (Canadian)
Tracked SF of Storage	3.17M

  Note: Data from Radius+, industry officials

The Storage Acquisition Group specializes in purchasing storage facilities and portfolios nationwide. Uniquely, we allow owners to sell direct without having to list their facility. With our 4-tiered approach, Market Analysis, Acquisitions, Underwriting, & Closing Support, The Storage Acquisition Group is able to help owners navigate a simple sales process while netting the highest possible profit.

TSAG Market Analysis: Montreal

By: The Storage Acquisition Group

First off, it’s “entreposage,” not “storage.”

That’s one of many things U.S. investors and others need to learn when trying to crack into the highly desirable but high-barrier self-storage market in Montreal, the second largest city in Canada.

Much has been made of the subtle differences between the Canadian and American self-storage markets, such as Canada’s higher construction costs and capital gains taxes and its lower number of storage units per capita compared to the U.S.

But those differences are only magnified in Montreal, the cultural and economic center of the French-speaking Quebec province that thinks of itself as almost a separate nation within a nation, with its own unique laws and regulations, including mandatory use of French when conducting (most) business in Quebec.

“French-Canadians are very proud of their language and heritage,” says Alain Gingras, senior director at StorageMart, which owns eight self-storage facilities in Quebec, five of them in the immediate Montreal area. “Anyone who doesn’t understand that (pride) is going to be in for a surprise.”

To be clear: Montreal, like other large Canadian cities, is an attractive self-storage market for long-time owners and new investors alike.

With more than 4 million people living in the metropolitan Montreal area, demand for self-storage is growing, albeit at a slower pace than in the U.S., and rent prices are strong, running around $200 (Canadian) a month, or about $156 in U.S. dollars, for a 10-by-10-foot storage unit.

But demand alone doesn’t account for the solid pricing. The Montreal area has a relatively small supply of storage properties, about 136 facilities, which amounts to about 1.39 square feet of storage space per capita, a low level compared to the penetration rate in other major Canadian cities, according to data from Radius Plus.

There are a number of reasons for the low supply, including the fact that Montreal proper is an island city at the confluence of the St. Lawrence and Ottawa rivers and doesn’t have much available space on which to build.

“The cost of land is very restrictive,” says Lloyd McDonald, director of Canadian acquisitions for The Storage Acquisition Group. “It’s not easy to find affordable space to build. Montreal is an older city, so old buildings often have to be converted if you want more storage.”

But like in other parts of Canada, as well as in parts of the U.S., zoning and permitting are tough in Montreal, increasing the time and cost of conversions or new construction, assuming investors can find properties to develop or redevelop. Further, construction costs are high in Montreal, as they are throughout most of Canada, even compared to the increasing rates in the U.S.

The city’s lack of available land and zoning restrictions has tended to push new self-storage construction into Montreal’s suburbs, though even there the pace of development is slower than in other areas of Canada, industry officials agree.

Another reason for the tight storage supply in the Montreal area: modern self-storage consisting of multi-story facilities and sophisticated climate-controlled systems – is relatively new to Canada, not just Montreal.  This is in comparison to the U.S. where these features consistently exist in major MSA’s.

“People here are just discovering self-storage,” says Simon Berman, co-founder of Montreal Mini-Storage, operator of 14 facilities in Quebec, with an additional two facilities on the way as a result of conversion projects. “There’s a relatively low awareness of self-storage, but it’s gaining acceptance. People realize they need space.”

And, last but not least, there are indeed cultural barriers that can make it challenging for some non-French speakers to do business in Montreal, such as requirements that marketing has to be conducted in both French and English.

“It’s different doing business in Quebec in general,” says David Allan, vice president of Apple Self Storage and a well-known writer and speaker about the Canadian self-storage industry. “Montreal is such a wonderful city. They’re very proud of their heritage, so they have specific laws to protect it. It’s little things that can be a challenge, such as digital marketing in both languages.”

In addition, French-Canadians tend to like doing business with local or regional companies, if possible, so larger national (or continental) self-storage operators may be at a disadvantage when it comes to some local customers, industry officials agree.

Such customer sentiments and other high-barrier factors partly explain why there are relatively few large self-storage players in the Montreal market compared to the rest of Canada.  About 50 percent of self-storage facilities in Toronto are owned by national companies, but in Montreal, the figure is only about 15 percent. Partly due to hesitancy on the part of developers and investors to enter the market.

The overall attractions of Montreal – including its size, growing storage demand, and solid pricing — ultimately outweigh any challenges.

“Montreal is such a unique city,” agrees McDonald of The Storage Acquisition Group. “It’s a good storage market with a lot of potential to grow.”

And remember: it’s “entreposage,” not “storage,” or “entreposage libre service,“ if you really want to impress the locals.

 

Greater Montreal at a Glance

Population	4.2M
Square Feet of Storage Space	5.5M
Number of Storage Facilities	136
Penetration Rate	1.39
Percentage of renter-occupied dwellings	42%

  Note: Data from Radius+, industry officials

The Storage Acquisition Group specializes in purchasing storage facilities and portfolios nationwide. Uniquely, we allow owners to sell direct without having to list their facility. With our 4-tiered approach, Market Analysis, Acquisitions, Underwriting, & Closing Support, The Storage Acquisition Group is able to help owners navigate a simple sales process while netting the highest possible profit.

TSAG Market Analysis: Vancouver

By: The Storage Acquisition Group

Vancouver is considered one of best self-storage markets for investors in North America; that is if you can find an affordable property to buy or build upon.

As Canada’s third-largest city, Vancouver, has been booming in recent decades. With the population of the British Columbia metropolis, located just north of the U.S. border along the Pacific Rim, increasing by 500,000 since 2000 and by nearly a million people since 1990.

Not surprisingly, the housing market has been on fire, as new multifamily towers and other dwellings are built, sold, and leased at an expeditious pace to meet the growing demand of the region’s now 2.4 million residents. All of the growth has been very good for self-storage operators in Vancouver.

“A lot of micro-sized apartment buildings are going up and they offer very little in the way of storage for tenants or owners,” says Hugh Cartwright, co-founder, and chairman of Vancouver-based Nationwide Self Storage. “So, outside of the standard users such as the four D’s (Death, Divorce, Downsizing or Dislocation), everyone needs to store camping equipment, sporting equipment, like skis and hockey gear, and Christmas stuff or small business inventories.”

As a result of that demand, self-storage occupancy rates and rent prices are high in Vancouver.  Radius Plus reports prices for some 10-by-10 storage units in the Vancouver area are now hovering in the $366 (Canadian dollars) range, or about $290 in U.S. dollars. Those are eye-popping dollar figures in either currency.

Sure, demand for storage in Vancouver is strong, but when it comes to why occupancy and rental rates are so high there is more to the story than increasing population. The supply of storage space is very low in Vancouver, at least by U.S. standards.  Low supply and high demand – that’s where it gets challenging for investors.

With about 5.8 million square feet of self-storage space in the region, Vancouver’s self-storage penetration rate – or the amount of square feet of storage per capita – is about 2.4, less than half the U.S. rate of 6, according to Radius Plus. The Vancouver metro area has only about 114 storage facilities, averaging about 52,000 square feet in size.

Vancouver’s self-storage penetration rate is actually in line with the rest of Canada, which traditionally has had fewer storage units per capita compared to the U.S. There are a number of reasons cited for Canada’s lack of storage facilities, including the fact Canadians don’t pick up and move from region-to-region as often as Americans.

In the case of Vancouver, there’s another reason: lack of available, and affordable, land. The scenically beautiful Vancouver area is hemmed in by water, mountains, and the U.S. border.  Available land is hard to find, says Robert Madsen, president of U-Lock Mini Storage and President of the Vancouver Island Self Storage Association.

“Land is very expensive – and when you do find available land it usually goes to someone else who plans to use it for a different purpose and can pay more,” he says, noting Vancouver’s voracious appetite for more housing.

In fact, Vancouver is considered the most densely populated city in Canada, with a large number of multi-family residential towers packed into a relatively small area, according to published reports.

Besides the lack of available and affordable land, construction prices in Canada are higher than in the U.S.  Then there’s the, oftentimes daunting, zoning and building restrictions that add to the woes of developing new facilities in Vancouver.

Combine everything together – lack of land, high land and construction costs, and regulatory hurdles to building – and you have “sheer frustration” when it comes to new construction, says Madsen.

While there are high barriers to building in Vancouver, there are also high barriers to buying in Vancouver, as well as in other Canadian cities. The main barrier: the country’s high capital gains tax that discourages existing facility owners from selling.

“The capital-gains tax makes people think twice about selling,” says Lloyd McDonald, director of Canadian acquisitions for The Storage Acquisition Group. “When talking to owners of self-storage facilities, the tax question comes up quite often.”

The bottom line, says McDonald, is that owning self-storage facilities in Vancouver is an “unequivocally good investment” – but cracking into that market is hard.

There is new construction under way in the Vancouver area. According to Radius Plus, the current projected supply pipeline would add about 2.9 percent to the region’s total square footage of self-storage space, increasing Vancouver’s penetration rate to about 2.52.

But that supply increase probably won’t be enough to meet demand, especially if Vancouver remains a popular magnet for newcomers, particularly immigrants from Asia. Besides its natural beauty, Vancouver is seen as a culturally sophisticated and cosmopolitan city, consistently ranking high on travel lists as one of the more attractive and “livable” cities in the world.

“Vancouver is such a unique place,” says McDonald. “It really feels like a different country. I love going and staying there.”

Vancouver’s attractiveness makes it a “very positive” long-term bet for investors, says Cory Sylvester, a principal at Radius Plus. “Its housing market is hot. Obviously, housing growth helps storage.”

Nevertheless, U-Lock Mini Storage’s Madsen warns there are plenty of “if” caveats when it comes to investing in the Vancouver region.

“The big “ifs” are if you can find a place to buy or if you can find a site to build,” he says. “Vancouver is a great market, but it’s a very challenging market”.

Greater Vancouver at a Glance

Population	2.4M
Square Feet of Storage Space	5.8M
Number of Storage Facilities	114
Storage Per Capita	2.4
Percentage of renter occupied dwellings	34%

  Note: Data from Radius+, industry officials

The Storage Acquisition Group specializes in purchasing storage facilities and portfolios nationwide. Uniquely, we allow owners to sell direct without having to list their facility. With our 4-tiered approach, Market Analysis, Acquisitions, Underwriting, & Closing Support, The Storage Acquisition Group is able to help owners navigate a simple sales process while netting the highest possible profit.

TSAG Market Analysis: Las Vegas

By: The Storage Acquisition Group

Las Vegas has become a very good bet for self-storage owners and an increasing number of investors looking to jump into the Nevada market.

Though Greater Las Vegas has seen a substantial uptick in new self-storage construction in recent years, Nevada’s largest metropolitan area hasn’t experienced major price volatility.  Although other cities have endured price unpredictability with new facilities suddenly coming online, Vegas’s growing population has kept demand high for self-storage in the market.

“It’s been a great market,” says Cory Sylvester, a principal at Radius Plus, the research arm of Union Realtime, the self-storage data analytics company. “Las Vegas has been a big beneficiary of net migration, a lot of it coming from California.”

Indeed, Sin City, known for its bright lights and the high hopes of gamblers flocking to its famed casinos, isn’t the only metro area booming these days in Nevada.

Reno, the state’s third-largest city located in northwest Nevada, has seen its population spike by about 18 percent over the past ten years, to about 266,500 people. New residents keep coming into Reno, and surrounding areas, often from nearby California.  California’s taxes and cost-of-living are much higher than in Nevada, which doesn’t have a state income tax.

“There’s a lot of building going on, but it’s not overbuilding,” says Todd Whear, owner of Stor-All, referring to the suburban self-storage market in northern Nevada. “It’s needed construction due to high demand. It’s all demand-driven.”

Whear, vice president of the Nevada Self-Storage Association, owns five facilities in northern Nevada, with its headquarters located an hour south of Reno, and is adding 35,000 square feet at two facilities as a result of the strong demand.

In the Las Vegas area, there’s most definitely a boom in both population and the demand for more housing – and thus the need for more self-storage space has spiked.

With 276 facilities and 17.9 million square feet of self-storage space, the Las Vegas-Henderson-Paradise region has a penetration rate, or the amount of square feet of self-storage space per capita, of about 8.3, just a little higher than the national average, according to Radius Plus data.

Currently, there are about 29 facilities in the development pipeline, which could add 12.4 percent to the Las Vegas region’s total supply of self-storage space, according to Radius Plus. But Sylvester of Radius Plus says the area should be able to absorb new space.

“People know it’s a healthy market and that’s why it’s attracting investors,” says Sylvester.

There has indeed been some price unpredictability of late, with climate-controlled prices falling from around $2.30 per square foot in early July to $1.79 per square foot in early August. But prices are still way up from the pre-pandemic average of around $1.20 per square foot, data shows.

Meanwhile, the occupancy rate in the Las Vegas area has continued to hover at around 95 percent.

“Las Vegas is a very dynamic market,” says Gary Free, president, and CEO of Towne Self Storage, which has seven facilities in the Las Vegas area, in addition to about 20 other facilities in Utah and Arizona. “Things got a little difficult during the pandemic last year, but currently we’re doing quite well. Rents have been going up.”

Free noted that all segments of commercial real estate, not just self-storage space, seem to be doing well these days in Las Vegas.

Despite the vibrant nature of the Las Vegas market, Free, whose firm develops self-storage facilities, said investors still have to do their research in order to succeed in the region. Some of the risk factors include the state of the still fragile national economy, inflation, and overbuilding in certain sections of the region.

“You have to be very careful because it’s easy for an area to get overbuilt,” says Free. “But we’re pretty happy right now.”

Dylan Stallings, an advisor for The Storage Acquisition Group, said he’s impressed with the rents that storage facilities have been getting of late in the Las Vegas area, noting they’re now hovering just shy of $1.30 per square foot. The reason for the strong price trends: The region’s growing population, Stallings said.

According to U.S. Census data, Las Vegas’s population has increased by about 14 percent over the past ten years, to about 667,500 people.

Meanwhile, the city of Henderson, just south of Las Vegas, has seen an eye-popping 32 percent increase in population since 2010, to about 341,500 residents. All of those new residents need new housing – and self-storage space that’s associated with people on the move.

“There’s definitely a lot of people moving out of California and feeding into Nevada,” says Stalling.

As for potential overbuilding, Stalling said it’s a concern, but not a big concern, considering the growing demand for space in the Las Vegas region. “If rent trends continue, new construction shouldn’t be a problem,” says Stalling.

The bottom line: Las Vegas area is considered a “very healthy market” in the long run, says Stalling.

Steve Kramer, president of the Nevada Self Storage Association, agrees that Las Vegas is a good long-term bet for investors – as long as the market doesn’t get too hot and overbuilt. “Oversaturation is the only thing I worry about,” he said.

Greater Las Vegas at a Glance

Number of Facilities	276
Development Pipeline	29 Facilities/12% of Supply
Population	2.2M
Penetration Rate	8.3
Median Household Income	$60,909
Percentage of renter-occupied dwellings	41%

  Note: Data from Radius+, industry officials

The Storage Acquisition Group specializes in purchasing storage facilities and portfolios nationwide. Uniquely, we allow owners to sell direct without having to list their facility. With our 4-tiered approach, Market Analysis, Acquisitions, Underwriting, & Closing Support, The Storage Acquisition Group is able to help owners navigate a simple sales process while netting the highest possible profit.

TSAG Market Analysis: Toronto

By: The Storage Acquisition Group

Self-storage is self-storage, right? Not necessarily, the Toronto market really is different

In Canada, the self-storage industry seems to be following the same general trajectory as the U.S. sector, with demand for storage increasing, prices rising and investors chasing opportunities wherever they can find them.

But the Canadian self-storage market – particularly in Toronto, the largest city in Canada and the fourth largest city in North America – is indeed different from the U.S. market in scale, pricing, and investment opportunities, thanks largely to Canada’s higher costs and taxes, generally tougher zoning and building restrictions, and fewer self-storage facilities that come on the market for sale, industry officials agree.

“There are similarities between the U.S. and Canadian markets, but Canada is still very much a different market,” says Cory Sylvester, a principal at Radius Plus.

In the case of Toronto, it’s definitely a booming market by almost every standard. The Toronto metropolitan area’s population has soared in recent decades, rising from about 4.6 million people in 2000 to 6.25 million people today. The increase is largely due to Toronto’s dynamic and diverse economy and an influx of immigrants to the region from around the world.

“Toronto has been doing really well,” says Chris Killi, the former chief executive of Real Storage and a member of the board of directors at the Canadian Self-Storage Association. “Toronto has an incredibly strong housing market – and it’s a fast growing city.”

As for storage, Toronto is easily considered Canada’s largest self-storage market with 234 facilities – with additional facilities currently being built to meet the growing demand for space propelled by a fast growing population.

But here’s where the scale issue enters the picture. The square feet of storage space per capita in Toronto is only 2.4, not even half the penetration rate of the average U.S. city, according to Radius Plus data. Indeed, the penetration rate for all of Canada is only about 2.4 percent.

So what’s going on? Remember, it’s a different market.

David Allan, vice president of Apple Self Storage, one of the largest self-storage players in the Toronto area, said there is a number of explanations why Toronto, in particular, and Canada, in general, have fewer storage facilities per capita compared to markets in the U.S.

Canadians have historically used less self-storage space than Americans, partly because they tend not to move from region to region, or city to city, as often as Americans, Allan says. Canada also has a much smaller military than the U.S., with fewer troops and sailors moving from base to base around the country and the world – and thus not requiring as much storage for personal belongings.

Others also point to the fact that Canadian homes, on average, have more basement space than American abodes, thanks to its colder northern climate that requires foundations to be built well below frost lines. In other words, the average Canadian has more home storage space than the average American.

But Allan and others agree financial and regulatory challenges also factor into why there’s a relatively low number of self-storage facilities in Toronto and across Canada compared to the U.S. – and this is where the pricing issue comes into play.

In general, the cost of land and new construction in Canada, especially in the Greater Toronto Area (GTA), are generally more expensive than in the U.S., partially due to “soft” costs, such as high income taxes that drive up labor prices, high commodity taxes and high development fees that make it more expensive to build north of the border

Like some U.S. cities, Toronto and other major Canadian cities also tend to have tough zoning and building codes that make it harder to build new self-storage facilities, industry officials say.

The bottom line: the supply of new self-storage facilities isn’t keeping up with higher demand driven by population increases in Toronto, Vancouver, Montreal, and other major metro areas in Canada. Though Toronto has seen new construction in recent years, it’s nowhere near the levels seen in the more free-wheeling U.S. metropolitan markets, according to Radius Plus data.

The result of both higher construction costs and the supply-and-demand imbalance in Toronto: higher self-storage rental rates.

The average rental price in Toronto is now running around $200 (U.S.) a month for a 10-by-10-foot climate controlled unit – with some areas of the city seeing rental prices in the $300 (U.S.) range, according to Radius Plus data and industry experts.

“The pricing is structurally higher in Toronto,” says Radius Plus’s Sylvester.

Even though Toronto is an expensive city to build and own properties in general, the higher self-storage rental rates are why industry officials, such as Sylvester, Allan, and Killi, are so optimistic about the Toronto market, where occupancy rates remain high.

“Fundamentally, the (rate) numbers in Toronto will continue to outpace the top-tier U.S. markets over the years,” says Sylvester.

Still, Lloyd McDonald, Director of Canadian Acquisitions for The Storage Acquisition Group, says investors interested in jumping into the Toronto acquisition market, or any Canadian metro market, need to be patient. The reason: self-storage owners tend to hang on to properties longer than their U.S. counterparts, due to high capital-gains taxes in Canada.

“Capital gains taxes are always a topic of discussion when it comes to sales,” says McDonald. “The capital gains tax is a major factor in Canada.”

But once investors construct or acquire facilities in Toronto, or in other major Canadian metro areas, the long-term investment prospects are good, said McDonald.

“Self-storage has become an asset class that’s much sought after these days,” he says. “There may not be as many (facilities) for sale, but the pandemic and the economic downturn have recently highlighted the self-storage industry’s strengths. Toronto is a very attractive market.”

Greater Toronto at a Glance

Number of Facilities	234
Total Self-Storage	14.46M Square Feet
Population	6.25M
Penetration Rate	2.4 (City); 3 (GTA)
Median Household Income	$65,829
Percentage of residents renting apartments	32%

  Note: Data from Radius+, industry officials

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The Storage Acquisition Group specializes in purchasing storage facilities and portfolios nationwide. Uniquely, we allow owners to sell direct without having to list their facility. With our 4-tiered approach, Market Analysis, Acquisitions, Underwriting, & Closing Support, The Storage Acquisition Group is able to help owners navigate a simple sales process while netting the highest possible profit.

TSAG Market Analysis: Albuquerque

By: The Storage Acquisition Group

New Mexico isn’t the brightest of the Sunbelt states when it comes to self-storage, but it’s bright enough for current owners and investors who like their future prospects in Albuquerque and other growth areas in the state.

There’s no doubt New Mexico isn’t experiencing the population boom as seen in nearby Texas to the east (8.9 percent, from 2010 to 2020), Arizona to the west (11.9 percent), and Colorado to the north (14.8 percent).

By contrast, New Mexico’s population increased by only 2.8 percent from 2010 to 2020. And the growth in Albuquerque, the state’s largest city at 915,000 people, increased by only 1.67 percent during the same time period, according to the U.S. Census.

Many believe the slower growth, at least compared to other Sunbelt states, is attributed to an “economic malaise” that’s kept the state’s unemployment rate high in recent years. New Mexico’s jobless rate was 8.3 percent in April, above the national average of 6.1 percent

So why are people still encouraged about the state and Albuquerque’s self-storage prospects?

Precisely because they’re both considered relatively stable and steady markets whose long-term attractiveness remains strong as long as Americans keep flocking to Sunbelt states in general.

“We’re not a high-growth market like other nearby states, but we’re still growing and there are great opportunities here,” says Brian Patterson, vice president of development at Titan Development, an Albuquerque-based commercial real estate developer that’s built four self-storage facilities in New Mexico in recent years.

“You can find micro-markets here that are underserved,” he said. “New Mexico has been good to us.”

In many ways, New Mexico – and specifically Albuquerque and its immediate surrounding area – defy normal self-storage industry logic.

The Albuquerque metropolitan area has seen solid, though not hyper-active, new construction in recent years – with a total supply of self-storage space increasing by 9 percent since 2017, according to data from Radius Plus, the research arm of Union Realtime.

Meanwhile, the region’s self-storage penetration rate, or the amount of self-storage feet per capita, remains at a high of 8.1 percent, well above the national rate of about 6.

And yet Albuquerque’s prices have remained relatively strong over the years – and were hovering in May in the $175-per-month range for 10’-by-10’ climate-controlled units, according to Radius Plus data. Occupancy levels have remained above 90 percent.

The city of Santa Fe, the state’s scenic capital located northeast of Albuquerque, is seeing even stronger self-storage prices, ranging in the monthly $225 range, despite somewhat active new construction in recent years. Occupancy levels are also strong in Santa Fe.

“It just goes to show how self-storage is really a market-by-market phenomenon when it comes to performance,” Cory Sylvester, a principal at Radius Plus, says of the seemingly contradictory self-storage data tied to New Mexico in general and Albuquerque in particular.

“Overall, Albuquerque is not a dynamic market, but it’s stable,” Sylvester adds. “It hasn’t seen insane amounts of new supply. Generally speaking, it’s a pretty good market.”

Monty Spencer, president, and CEO of The Storage Acquisition Group says Albuquerque is just like any other self-storage market across the country in one important regard.

“If you do your research thoroughly and carefully, the opportunities are there in Albuquerque and elsewhere in New Mexico,” he says. “It’s important to find the underserved areas within all markets. You just have to look.”

Spencer adds: “Albuquerque has caught the same ride that many of the other self-storage markets have over the past few years and has been buoyed by the pandemic with more people working from home.”

Forrest Thomas, president of Thomas Properties, owner of five self-storage facilities in New Mexico – one in Albuquerque, three in Santa Fe, and one in Roswell – agrees with others that New Mexico, in general, is “not a prime market” compared to other fast-growing Sunbelt states.

But it’s still growing – and both Albuquerque and Santa Fe have seen “quite a few” new facilities built in recent years. Despite the new supply of self-storage, prices have remained relatively strong, Thomas says.

Though Albuquerque is considered a secondary market, large industry players and real estate investment trusts, such as Extra Space, have moved into the market in recent years, though not so much in the smaller market Santa Fe, according to industry officials.

What’s preventing Albuquerque from becoming a hotter region in terms of population growth and thus self-storage growth? The answer, most agree, is the economy. The state simply needs more dynamic employers that produce jobs attractive to younger people, industry officials say.

To be clear: the state has its respected University of New Mexico –as well as the federal government’s Sandia National Laboratories, Los Alamos National Laboratory, and the Air Force Research Laboratory. Netflix also recently announced it will boost its presence in the state by expanding its ABQ Studios in Albuquerque’s Mesa Del Sol area and committing to an additional $1 billion in production spending, according to recently published reports.

But most agree the state needs more major employers — and their accompanying jobs — to start growing at a faster clip.

Dean Alexis, a member of the New Mexico Self-Storage Association and owner of two self-storage facilities in Santa Fe, said the state has been “mired in semi-economic malaise” for a while now. “We’re certainly better than California, but not as good as Texas,” he said of the state’s economic performance of late.

Still, Ryan Goodman, a partner at Around the Corner Self-Storage and a member of the New Mexico Self-Storage Association, says he’s upbeat moving forward. “It’s a good market that I think will grow,” he said. “I’m optimistic.”

Greater Albuquerque at a glance

Number of Facilities	187
Total Self-Storage	9.4M Square Feet
Population	910,000
Penetration Rate	8.1
Median Household Income	$55,383
No. of Facilities in Dev. Pipeline	9

  Note: Data from Radius+

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The Storage Acquisition Group specializes in purchasing storage facilities and portfolios nationwide. Uniquely, we allow owners to sell direct without having to list their facility. With our 4-tiered approach, Market Analysis, Acquisitions, Underwriting, & Closing Support, The Storage Acquisition Group is able to help owners navigate a simple sales process while netting the highest possible profit.

TSAG Market Analysis: Phoenix & Tucson

By: The Storage Acquisition Group

One of the sunniest areas of the Sun Belt keeps getting sunnier when it comes to self-storage.

According to industry data and officials, the self-storage market in Arizona – and specifically its two largest cities, Phoenix and Tucson — keeps defying the already high expectations, with rental prices increasing at a fast clip despite a sharp spike in new self-storage supply.

The main reasons for the almost unprecedented growth even for a Sun Belt state: A strong economy, a booming population and a red-hot housing market – all of which are generating a huge demand for self-storage. And it doesn’t hurt that many nearby Californians, fed up with high housing prices and taxes, are flocking to Arizona by the thousands each year, according to industry officials.

“We’re busier than ever,” says April Worden, owner and CEO of Brown Worden Properties, owner of 19 self-storage facilities in the Tucson area. “The demand keeps growing. We opened up our 19^th facility last year and it’s already 70 percent occupied.”

The numbers pretty much tell the story for Arizona in general – and the Phoenix and Tucson areas in particular.

According to U.S. Census data, Arizona was the third fastest growing state in America in 2020, with its population jumping by 1.78 percent to 7.4 million people. The nation’s overall population growth in 2020: 0.5 percent.  Indeed, Arizona’s population has grown by 45 percent so far this century, according to U.S. Census data.

And most of that growth is flowing to the Greater Phoenix area, which includes the nearby cities of Scottsdale, Mesa, and Tucson.

The result: An increase in demand for both short-term and long-term self-storage.

With a population of 4.6 million people, the Phoenix area has seen an 18.3 percent increase in self-storage supply over the past three years, to 33 million square feet, according to data from Radius Plus, the research arm of Union Realtime. Meanwhile, the Phoenix area’s penetration rate, or the square feet of self-storage space per capita, is about 6.7, compared to the national average of 5.9.

In other markets, such an increase in supply would lead to a deflation of rental prices, if only briefly, but that hasn’t been the case in Phoenix. Radius Plus data shows Phoenix’s lease prices consistently growing in recent years, hitting about $1.82 per square foot for climate-controlled REIT units and $1.70 in general for all units, as of early April.

“This is a very healthy market,” says Cory Sylvester, a principal at Radius Plus.  Asked if he sees any major negatives about the Phoenix market, Sylvester answered simply: “No. It has a great long-term growth outlook.”

With a population of about 1 million, Tucson’s self-storage market isn’t as hot as the Phoenix market – but it’s very solid by most other standards. It’s seen a supply growth of about 9 percent, to 6.5 million square feet, over the past years, according to Radius Plus data. Meanwhile, its penetration rate is about 6.1, just above the national average.

But Tucson’s rental prices are strong, hovering in the $2.06-per-square-foot range for climate-controlled units, according to Radius Plus data. The interesting thing about Tucson’s market: Many of its units are non-climate-controlled – and yet prices remain at relatively high levels, Sylvester notes.

“Tucson is definitely a growth market, but just not to the same extent as Phoenix,” says Sylvester.

Dylan Stalling, an advisor for The Storage Acquisition Group, says the success of the Phoenix and Tucson markets all come down to the state’s strong economy and booming population – and the huge demand for new housing.

“There’s literally waiting lists of people trying to buy new homes,” he says. “They can’t build them fast enough.”

And that housing demand is leading to more demand for self-storage, as people temporarily store items until they find new homes or as people decide they won’t need as many items in newer multifamily dwellings.

“People are realizing they need more storage space,” says Stalling. “The pandemic and remote-working have also increased the demand for more space. It’s all about demand.”

“With the high housing demand comes the need for more storage solutions,” agrees Whitney Jurjevich, a member of the board at the Arizona Self-Storage Association and owner of Ameripark Covered Storage. “The thought of overbuilding is directly correlated with what is happening in residential. The market is trying to keep up with the demand and much is through multifamily development – meaning those residents need (storage).”

And it’s more than just household and business items needing storage space. Jurjevich, whose firm specializes in RV and boat storage solutions, said his business has seen strong demand for space among outdoor-minded Arizonians. The pandemic – and the recreational desire of people to get outdoors – has only helped demand, he said.

Though industry officials stress that the self-storage fundamentals are strong for both Phoenix and Tucson, they do warn of rising prices – specifically rising labor and construction prices for homes, self-storage facilities and commercial structures in general.

“Materials are getting really expensive,” says Worden of Brown Worden Properties. Jurjevich agrees “It is very frothy right now so prices are elevated for everything.”

Self-storage competition in some areas is also heating up, particularly in the Phoenix area, says Stalling of The Storage Acquisition Group. “The Phoenix area is where a lot of the competition is headed. It’s getting aggressive.”

Still, Stalling and others remain bullish on the Phoenix and Tucson markets – and Arizona as a whole.

“Arizona draws in so many people with its diverse opportunities that cover a wide variety of interests including recreational/outdoor activities, vibrant career opportunities, low cost of living, and an overall high quality of life for many income ranges,” says Jurjevich. “Because of these reasons, it has created many needs to be filled by self storage.”

Greater Phoenix/Scottsdale/Mesa at a Glance

Number of Facilities	542
Total Self-Storage	33M Square Feet
3 Year Growth in Supply	18.3%
Population	4.6M
Penetration Rate	6.7
Median Household Income	$67,363

  Note: Data from Radius+

Greater Tucson at a Glance

Number of Facilities	130
Total Self-Storage	6.5M Square Feet
3 Year Growth in Supply	8.8%
Population	1M
Penetration Rate	6.1
Median Household Income	$52,379

  Note: Data from Radius+

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The Storage Acquisition Group specializes in purchasing storage facilities and portfolios nationwide. Uniquely, we allow owners to sell direct without having to list their facility. With our 4-tiered approach, Market Analysis, Acquisitions, Underwriting, & Closing Support, The Storage Acquisition Group is able to help owners navigate a simple sales process while netting the highest possible profit.